Fixed Deposits (FDs) continue to remain one of the safest and most preferred investment options for millions of Indians. In recent months, several small finance banks and regional banks have increased their FD interest rates, giving depositors a chance to earn returns as high as 9% annually in certain tenures. This rise in rates comes at a time when many investors are looking for guaranteed returns with low risk.
Higher Interest Rates from Small Finance Banks
Small finance banks are currently offering some of the highest FD returns in the market. These banks typically provide better interest rates than larger commercial banks because they aim to attract new customers and boost deposits. Senior citizens can receive an additional interest benefit, pushing returns even higher.
Commercial Banks Offering Attractive Rates
While major public and private sector banks generally offer lower rates compared to small finance banks, several of them have also revised their FD schemes. They now provide competitive rates on selected tenures, especially for deposits ranging between one and three years. These schemes are designed for customers who want security along with moderate but stable returns.
Why FD Rates Are Rising
The upward movement in interest rates is influenced by market liquidity, lending demand, and monetary policy trends. As banks try to maintain a balance between attracting deposits and managing loan requirements, FD rates are periodically adjusted. This creates an opportunity for investors to lock in high rates for long-term stability.
Safety and Choosing the Right Bank
While high interest rates are attractive, depositors should always check the bank’s credibility, deposit insurance coverage, and terms of premature withdrawal before investing. FDs with all scheduled banks whether large public banks or smaller finance banks are covered under deposit insurance up to the allowed limit, which provides added protection.
